Buy Varun Beverages; target of Rs 765: Axis Direct

Axis Direct's research report on Varun Beverages

PepsiCo India has transferred five new territories and its entire juice portfolio to Varun Beverages (VBL) over past few months. This is in line with our expectations and a testimony to VBL’s proven ability over time. VBL now controls ~51% of PepsiCo volume in India. While organic business is posed to grow in high-single digit with 7-8% volume growth given multiple tailwinds,

Outlook

We see inorganic prospects to be a kicker. Capturing the stated inorganic additions, we see sales CAGR of 16% over CY17-20E. We maintain BUY with revised TP of Rs 765 based on forward EV/E of 13x (Rs 590 earlier). For all recommendations report, click here

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